Suppose the demand for a product is P = 100 – ½ Q
Question # 00139866
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Updated on: 11/24/2015 11:27 AM Due on: 12/24/2015
Suppose the demand for a product is P = 100 – ½ Q and the supply of virgin inputs is 20 units. The marginal cost curve for recycled inputs is r = Q/4. Compute the socially efficient output level, the use of recycled inputs, and the efficient recycling ratio. Recompute all these under the following changes (take them one at a time) and compare them to the original case.
- Demand falls to 80 – ½ Q
- The MC curve for recycling inputs becomes r = Q/6
3. The supply curve for virgin inputs increases to 30
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Solution: Suppose the demand for a product is P = 100 – ½ Q